Thitikorn turns to overseas expansion

SET-listed Thitikorn Plc (TK), the country’s largest motorcycle lender, is eyeing inorganic growth as a means to strengthen its foothold in seven Southeast Asian countries and drive overseas business to account for half of its outstanding loans by 2020.

“We’re looking for opportunities to expand business in seven Southeast Asian countries [excluding Singapore, Brunei and Malaysia] through mergers and acquisitions,” said deputy managing director Praphon Phornprapha.

At present, TK has three branches in Cambodia and a branch in Laos. It also has affiliated companies in four countries.

TK’s outstanding motorcycle loans abroad represent 2% of the company’s total loans.

Motorcycle sales in Laos are nearing 200,000 units a year, and car sales in Cambodia are even higher at 400,000500,000 units.

Revenue from overseas businesses in the first nine months of the year tripled from 2015 to 90 million baht.

Mr Praphon said expansion in neighbouring countries will help the company sustain long-term growth, as these markets are enjoying a rapid growth of motorcycle sales.

To fund its business expansion, the company is able to borrow from financial institutions without recapitalisation due to its low debt-to-equity (D/E) ratio of 0.9, compared with the overall industry average of eight to nine.

“We’re able to raise additional funds by borrowing 18 billion baht to boost our business growth, and the D/E, if that’s the case, will be around five — a level our company considers acceptable,” Mr Praphon said.

Meanwhile, managing director Prathama Phornprapha said TK targets at least 5% growth in its lending and revenue next year.

TK also aims to keep average financial costs at around 3% and non-performing loans at 4%.

The company’s motorcycle and car loans outstanding at the end of September totalled 7.62 billion baht, a 5.1% increase over the same period last year.

Motorcycle loans contributed to 90% of TK’s total loans outstanding, while auto loans made up for the rest.

Its total assets amounted to 8.50 billion baht, up 2.7% year-on-year.

Ms Prathama predicts the company’s loans will grow by 8% or 7.8 billion baht this year, underpinned by recent government stimulus and low interest rates.

Domestic motorcycle sales until September rose by 4.4% to 1.35 million units.

TK shares closed yesterday on the Stock Exchange of Thailand at 10.90 baht, up 20 satang, in trade worth 22.7 million baht.